Diesel and Petrol prices set to rise

New Delhi, May 5: Elections are over and oil prices in the international market is hoovering above the $120 mark. It has been reported widely in the media that the government is planning to raise prices of diesel by Rs 5 per litre approximately.

According to a leading national daily, the empowered group of ministers (EGoM) will meet on May 11 and take decision over the oil ministry's proposal on diesel prices. This will be the first time since June 2010 when prices of diesel will be hiked. The EGoM will also consider about increasing the price of cooking gas and kerosene.

The government of India had last raised the price of diesel by Rs 2 per litre (June 26), the day it freed pricing of petrol. Since then the price of crude has increased from $75 per barrel to over $120 per barrel.

Oil companies are free to increase petrol prices but they have not done so, since January, as the government informally asked them to delay the hike till the assembly elections were over. Oil companies are also considering to raise the price of petrol by Rs 5 per litre or so from May 10 after assembly polls end .

The fuel for the poor, Kerosene, could also see a rise of Rs 3 per litre. Meanwhile, prices of cooking gas may increase by Rs 50 per litre. According to a report, Indian Oil, the biggest fuel retailer in India which has garnered a market share of over over 50% (in terms of volume) loses approximately Rs 30 a litre on kerosene and Rs 330 per cylinder on cooking gas.

Deregulating the diesel price will mean an increase of Rs 18 per litre which in turn will increase the rate of inflation, and also give the opposition the impetus to start anti-government protests.

A rise in the price of diesel is inevitable during the month of May, else the companies' revenue loss will touch Rs 2,00,000